I’m making a two household two sector model, which aims to simulate a consumption tax on the first good where the revenue is used to subsidize the other good. My issue is that I do not know how to code a permanent increase in tax, which is also gradual. I tried to use shocks but the issue with this is that, when I use shocks the tax variable goes back to the initial value in the last period, and when I use endval to code it to a specific value, it jumps in period 1 to the endval.
Do anyone have experience with coding something like this?
I have uploaded the code:
Baseline1.mod (7.8 KB)
Directly set the tax rate instead of declaring a shock to it:
Baseline1.mod (7.7 KB)
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If anyone should be interested in this type of model and not just the solution for my problem, the model I have written is not correctly specified/coded, I think I have found a fix, and I will upload it once I have made sure that everything works.
just for closure, if anyone is interested, here is a version of a model with 2 households and 2 sectors, where 1 household is non ricardian, and there is issued a consumption tax on 1 good and subsidy on the other, which works. It is not calibrated however.
RBC_htm.mod (9.1 KB)
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